Companies in the construction sector, which have experienced a downturn in building activity in recent years, are confident the future of the industry may be bright.
The construction sector has fallen victim to Zimbabwe’s economic hardships, dramatised by high interest rates and shortages of fuel and building materials that have limited the number of building projects. The construction sector has fallen victim to Zimbabwe’s economic hardships, dramatised by high interest rates and shortages of fuel and building materials that have limited the number of building projects.
Murray and Roberts Limited (M&R), which recorded a turnover of US$96bn in its key construction division and earnings before tax of US$4.5bn in the half-year ended June 30 2005, says it sees improved prospects in the mining, telecommunications, water and building markets.
"Construction had a thin order book for the greater part of the year. A number of significant contracts were awarded towards the end of year and these are expected to contribute significantly to the division’s profitability and cash flows in the new financial year. Opportunities identified are in mining, telecommunications, water and building markets," M&R said in its financial statement.
Turnall Holdings Limited, an industrial manufacturer and distributor of fibre cement products, saw exports contributing four per cent of total turnover compared to one per cent in the prior period.
Turnall chairman Herbert Nkala said the improved profitability was mainly due to an increase in volumes over the comparative period as well as price adjustments in response to input costs.
Turnall benefited from growth in construction of peri-urban homes for newly resettled farmers, as well as the building of new stuctures by housing cooperatives.
"The performance for the second half of the year has been strong, with volumes still above target. On the pipeline front, demand was driven by the continued rehabilitation of the irrigation systems and the Parastatals Local Authorities Reorientation Programme," Nkala said.
"Management remains focused and committed in expanding both the export and local markets to consolidate its dominant position," Nkala added.
The construction industry is currently facing a critical shortage of cement and other crucial construction materials, forcing many contractors to set aside several projects.
While a positive trend on the inflation front had initially been achieved, with the figure coming down from 624 per cent in December 2003 to 124 per cent in March 2005, the rate has since increased to 265 per cent in August.
Pretoria Portland Cement (PPC), the South African cement maker, said cement supply in Zimbabwe remained critical due to the weak economy.
"Cement operations in Zimbabwe were difficult with a contracting economy and hyperinflatory environment. Despite this, Portland continued to export to neighbouring countries, thereby earning much needed foreign exchange, and has again remained cash-positive over the period," PPC said.
Border Timbers Limited, a grower and processor of hardwood and soft wood timber, in its year ended June 30 2005 said its earnings for the year had been below expectations.
"The performance of the company this year, both in operations and financially, was way below what had been targeted. Only 76 per cent of the target was achieved," Border said.
Border’s turnover was affected by veld fires that destroyed 75 per cent of the estates and the breakdown of its two machines that resulted in downtime of more than two months.